The journey from the early 1900’s where the Victorian inheritance of major industries like shipbuilding and construction of locomotives were dominant, to the rise and apparent demise of white collar industries in Scotland today has been a far from smooth one. At the turn of the 20th century the Scottish economy was somewhat unstable.
The made to order capital investment products like the ships were over dependent on a healthy and thriving international market and quite simply if there were no orders then there were no jobs for the ordinary workers, no wages and so a poor standard of living and many times of uncertainty. This in turn had a knock on effect on Scotland’s basic industries like coal, steel and textiles. The shipyards didn’t need steel if they weren’t building so the steel works had no market and in turn the ordinary labourer bore the brunt.
Wages were already kept to a minimum as labour costs were the main deficit on the balance sheet. The companies, during lean times, had to keep costs low in order to deliver competitive quotes and this trend saw no sign of bucking as around 1910 only state help was keeping shipbuilding alive with almost all being produced at a loss despite low labour costs. In 1914 the First World War appeared, on the outside, to be a blessing in disguise for a floundering economy.
The Clydeside became the ‘workshop of the world’ as shipyards answered the government’s calls for more ships for war and the knock on effect for the basic coal and steel factories were similar. Massive orders and constant work saw the economy get back onto its feet but this was as it appeared too good to be true. In 1918 the war was over, no more ships or munitions were needed and the orders disappeared and Scotland was left without a major successful industry.
The war had in fact reinforced the existing trends with pre war plans to diversify into the electronics and car industries shelved in the naval race with Germany. War heroes returned to find a victorious nation in disarray. They were met with a low wage economy with no jobs as their wives had filled the void left by them as they put their lives on the line for the nation’s freedom. New technologies and machines had meant that fewer people were needed to do the same old jobs.
Synonymous to this was the extreme poverty, poor purchasing power, shabby housing and a nation of ill health. 5% of the housing built at the time were one or two roomed with anything from five to ten sharing this cramped space and conditions were widely regarded as the worst in the so called ‘advanced’ western world. An indicator of just how bad it was is that over half a million people emigrated between 1900 and 1918. Everyone was aware of the problems and whilst many ‘escaped’ the others left behind were left clueless as to a solution. They counted the cost of lost foreign markets in the East that were ignored in the height of the war and duly taken up by competitors.
Further trouble was to come with the news that U. S. A had made a breakthrough in mass production. Just like its famous Ford car plants they could now mass produce ships cheaper and faster than any method available in the decimated shipyards of the Clyde. Scotland’s economy subsequently lay in tatters for many years with massive long term unemployment a major problem and eventually the nations worst fears came true with the demise and eventual collapse of the worlds economy in 1929.
Scotland was left without a market which immediately initiated a spiral of decline. People had no jobs so they had no disposable income to buy products which in turn meant Scotland was not viewed as an attractive market for manufacturers and therefore no jobs and no money. Unemployment hit 400,000, twice as many as the rest of the UK and yet the response from Downing Street was minimal as they claimed they couldn’t interfere but offered a few alternatives such as cheap credit and low mortgages.
The final nail in the coffin was the introduction of ‘market protection’ or tax added to Britain’s exports which with a very small Scottish export market served little use. It was the retaliatory moves by other nations which meant it now cost Scots more to import goods from abroad. By now mining towns such as Airdrie had hit rock bottom with 70% unemployed and community spirit at an all time low but the outbreak of the Second World War was to change that.
A ‘bloody fight to the death’ was the pattern of this war and the Government recognised this but knew it faced major problems in convincing the ordinary people who had learned many harsh lessons from the last Great War. A new policy was abruptly drawn up and the Government took total control. Once again new life was breathed into all the heavy industries as the policy of a command economy took full swing with the government telling people where to go, what to eat and where to work and therefore stimulating the areas of the markets it wanted to revive and this dispelled their previous claim that they couldn’t help.
The success of the nation pulling together was rewarded with the eventual collapse of the Nazi’s and the experts deployed to plot their downfall now returned to not only a heroes welcome but to new trades; the structural engineers, explosives experts and pilots all helped open up new opportunities for all in these fields. As part of the command economy the government introduced widespread nationalisation across the board.
Banks, railways, steel, electricity, telephone and eventually shipbuilding were nationalised with most profits going straight into the treasuries purse and with almost all of Scotland’s industries under these sectors it is here that it had the greatest impact. Other reforms promised pre war were not easy to implement, nor were they cheap. With social security and housing improvements top of the agenda and with the UK effectively bankrupt after the war it had to rely on support from the U. S. that was set aside to re-inflate the western European market.
Scotland also had another advantage that wasn’t enjoyed in the aftermath of the first world war in that with its location it had survived remarkably unscathed and was the only surviving economy in western Europe and duly reaped the benefits of orders to help rebuild the infrastructure of the rest of Europe but it served as a costly reminder that lessons simply hadn’t been learned.
With nationalisation the government were delighted with the mass of orders flowing in and filling their swelling coffers as they tried to repay the cost of the war but by doing so they once again ignored diversification and Scotland was by this time more reliant on its capital investment industries than ever before and with the infrastructure nearing completion the flow of orders would soon dwindle. This eventually highlighted the need to finally shift away from these industries and in 1965 the government decided to give Scotland a ‘facelift’.
New roads, health services, new schools and public sector jobs emerged and this created an attractive market for investors as the populations standard of living dramatically improved and people now enjoyed secure employment with guaranteed wages. New companies identified the opportunity and moved in creating new jobs producing domestic electrical appliances, albeit of foreign brands but the people were happy as long as they had a job. After a period of sustained growth between 1967 and 1975 the Scottish economy could grow no further but the cost were constantly rising and deep trouble emerged as stagflation occurred.
Profits were falling every year as staff got higher wages so the cost of the goods rose, and in turn the workers needed more money to purchase them. This vicious cycle finally came to a head in 1976 when not for the first time the UK went bust. Intervention by the worlds major banks helped but Scotland’s worst nightmare was on the horizon in 1979 as Margaret Thatcher swept to power in Downing Street and single – handedly set about pulling the plug on the Scottish market.
De – industrialisation and withdrawal of state help rapidly and severely killed the economy and once again many thousands of Scots were in the dole queue and living in near poverty. She had inherited a nation which was on a sound social footing but throughout her term in office the rot began to set in and many would argue Scotland along with the rest of the UK, is still counting the cost of her time in power.
Another statistic that indicates this growing gap is the figure that the poorest 20% of households receive 6% of national income after tax, with the richest 20% reaping a massive 45% of the national income; highlighting the massive social inequalities that now exist and shocking figures reveal that while in real terms the taxation for the richest 20% of people has fallen as a percentage of income over the past twenty years the opposite is true for the poorest.
Despite all this Scotland’s economy isn’t actually in all that bad a shape in terms of job opportunities, with the growth of the service sector, electronics and insurance industries over the past twenty years Scotland now has just under the average UK household income and is by far not the worst off area. Scotland is now totally unrelient on the heavy industries and factories which now lie derelict and serve as a reminder of the Thatcher years but the disappearance of these areas of work has left its mark on the Scottish society, with many great divides now apparent within society.
There also seems now to be a discrimination against certain groups in society with single parents, pensioners and disabled making up a high proportion of the poor and with state benefits linked to the supposed ‘cost of living’ and not average income then the situation for these groups looks bleak for the foreseeable future. With these gaping divides continually growing it seems no one can really predict what the next 100 years holds for Scotland’s economy.